WA/1848/2004 of Mullapudi Srinivas KUmar Choudary, Vs The Government of A.P., on 29 December 2004

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD

WEDNESDAY, THE TWENTY NINTH DAY OF DECEMBERTWO THOUSAND AND FOUR

PRESENT

THE HON'BLE SRI JUSTICE B. SUDERSHAN REDDY

and

THE HON'BLE SRI JUSTICE C.V.RAMULU

W.A.Nos.1848, 1884 and 1910 OF 2004

WRIT APPEAL No.1848 of 2004

(Writ Appeal under Clause 15 of the Letters Patent against the Order dated 18/11/2004 inWP NO : 20121 OF 2004 on the file of the High Court)

Between:

Mullapudi Srinivas Kumar Choudary, S/o. Krishna Rao,R/o. Purushothapalli, West Godavari District.

AND

1 The Government of A.P., rep by its Secretary, Industries and Commerce Department, Secretariat, Hyderabad.

2 The District Level Committee, rep by its Chairman, West Godavari District.

3 The District Panchayat Officer, West Godavari District, at Eluru.

4 Sai Babu Reddy, S/o. Jagadhal Reddy,

R/o. Pekeru, Eragavaram Mandalam,

W.G. District.

.....RESPONDENTS

Counsel for the Appellant: Smt.N.SHOBA

Counsel for Respondent Nos.1to3: GP FOR PANCHAYAT RAJ & RURAL DEV.

Counsel for Respondent No.4 Sri C.V.MOHAN REDDY

WRIT APPEAL NO : 1884 of 2004

(Writ Appeal under Clause 15 of the Letters Patent against the Order dated 18/11/2004 inWP No.19747 OF 2004 on the file of the High Court)

Between:

Kundula Ganapathy Rao, S/o. Narasimha Murthy,R/o. Teeparu Village, W.G.District.

AND

1 The Govt of A.P., rep. by its Secretary, I&C., Dept., Secretariat, Hyderabad.

2 The District Level Committee, rep. by its Chairman, W.G.District.

3 The District Panchayat Officer, W.G.District at Eluru.

4 Sai Baba Reddy, S/o. Jagadhal Reddy,

Pekeru, Eragavaram Mandalam, W.G.District.

.....RESPONDENTS

Counsel for the Appellant:Smt.N.SHOBA

Counsel for Respondent Nos.1to3: GP FOR PANCHAYAT RAJ & RURAL DEV.

Counsel for Respondent No.4 : Sri C.V. MOHAN REDDY

WRIT APPEAL No.1910 of 2004

(Writ Appeal under Clause 15 of the Letters Patent against the Order dated 18/11/2004 inWP NO : 19735 OF 2004 on the file of the High Court.)

Between:

K.V.V. Satyanarayana,

S/o Narasimha Murthy,

R/o Teeparu village, Peraveli Mandal,

W.G.District

AND

1 The Govt. of A.P. Rep.by its Secretary, Industries and Commerce Department, Secretariat, Hyderabad.

2 The District Level Committee, rep.by its Chairman, West Godavari District.

3 The District Panchayat officer, West Godavari District, at Eluru.

4 Sai Baba Reddy, S/o.Jagadhal Reddy, R/o.Pekeru, Eragavaram Mandalam, W.G.District.

.....RESPONDENTS

Counsel for the Appellant: Smt. K.N.VIJAYA LAXMI

Counsel for Respondent Nos.1to3: GP FOR INDUSTRIES & COMMERCE

Counsel for Respondent No.4 : SRI C.V. MOHAN REDDY

The Court made the following :

THE HONOURABLE SRI JUSTICE B.SUDERSHAN REDDY

AND

THE HONOURABLE SRI JUSTICE C.V. RAMULU

W.A.Nos.1848, 1884 and 1910 OF 2004

COMMON JUDGMENT: (Per C.V.RAMULU, J )

These three Writ Appeals arise out of a common Judgment of the learned singleJudge in W.P.Nos.19735 of 2004 and batch, dated 18-11-2004, wherein ten writpetitions filed by various individuals and Societies seeking almost the same reliefwere dismissed.

The writ petitions were filed seeking a Mandamus declaring the action ofrespondents 1 to 3 in confirming the auctions held on 20-10-2004 in favour of the 4[th]respondent in pursuance of the Notification dated 3-10-2004 for West Godavaridistrict and not confirming the same in favour of the petitioners-appellants as illegal,arbitrary, unjust and contrary to Rule 9 of the A.P. Minor Mineral ConcessionRules,1966 (for short ‘the Rules’).

Conclusion

The District Level Committee of West Godavari District notified sand bearing areasand issued auction Notification Nos.4040/04, 5101/04 and 5102/04, dated 3-10-2004 proposing to conduct auction to the sand bearing reaches – reach-wise,package-wise and district-wise -respectively on 20-10-2004. The appellants-writpetitioners had participated in the auction. All the 22 reaches as a single packagefetched bid amount of Rs.2,73,50,000/-, 6 packages fetched Rs.1,87,63,639/- and 22reaches independently put together fetched Rs.2,80,98,692/-. The bidders had topay 25% of the knocked down amount on the immediate next working day i.e. 23-10-2004, since 21[st] and 22[nd] of October,2004 were public holidays. Auctions wereknocked down in respect of 18 bidders where 22 reaches were independentlyauctioned. Since only 8 bidders came forward to pay 25% of the knocked downamount and the remaining bidders had not turned up, the bidder, who offeredRs.36,50,000/- against the minimum amount/upset price of Rs.2,50,000/- to theParikkilanka reach, submitted a letter dated 23-10-2004 stating that he participatedin the auction and his companion raised bid upto Rs.36,50,000/- without his knowledge, but expressed inability to pay the knocked down amount and requestedfor cancellation of auction. As the individual bidders have not come forward todeposit 25% of the knocked down amount till 5.00 p.m. on 23-10-2004, the DistrictLevel committee, after reviewing the matter, called upon the highest bidder inrespect of the district package i.e. 4[th] respondent herein, whether he could enhancethe bid amount equal to the amount of all the 22 reaches independently fetched.Respondent No.4 accepted the same and deposited 25% of the knocked downamount on 24-10-2004. On such deposit, confirmation was issued in his favour –District Package - which led to filing of the writ petitions.

Learned single Judge after elaborate consideration of the matter, came to theconclusion that there is no material on record to show that the bid amount fetched inthe third method was low and would fetch higher amounts, if re-auctioned. The entireedifice of the writ petitions is based on the challenge to the increase of bid amountfetched in District Package amounts to negotiation with respondent No.4, who failedto deposit 25% of bid amount on the next day. There was no material to show thatthe tender price was understated and Respondent No.4’s bid was knocked down on20-8-2004. Thus, the learned single Judge held that in the absence of the same, it isnot possible for the Court to accept that the authorities acted unfairly or irrationally inconfirming the highest bid fetched in the District Package increasing the bid amountto that of individual reaches.

At the outset, it may be noted that Writ Appeal No.1848 of 2004 is filed againstW.P.No.20121 of 2004, W.A.No.1884 of 2004 against W.P.No.19747 of 2004 andW.A.No.1910 of 2004 against W.P.No.19735 of 2004. Learned counsel for theappellants mainly challenged the orders impugned in the writ petitions on theground that the auction was knocked down on 20-10-2004 in favour of the 4[th]respondent, but he did not pay 25% of the knocked down amount as required underthe Rules on the next day and paid only on 23-10-2004. On 24-10-2004, when thebid was offered to the 4[th] respondent, all the bidders participated in the Districtpackage could have been invited for negotiations and negotiating with the 4[th]respondent exclusively was bad in law.

Sri D. Prakash Reddy, learned senior counsel appearing for the appellant inW.A.No.1910 of 2004, submitted that the tender-cum-auction notification dated 3-10-2004 is a composite notification contemplating three methods of auctioning 22

reaches in the district; the first method was auctioning all the 22 reachesindependently, the second was auctioning them in six packages and the third wasauctioning all the 22 reaches as single package. The District Level Committee in itsmeeting held on 21-10-2004 resolved to ask the 18 bidders, who participated in thebidding of individual reaches through the first method, to pay 25% of the knockeddown amount before 5.00 p.m. on 23-10-2004, since the total bid amount derived inthis method was the highest one. Therefore, it must be deemed that only the firstmethod was favoured and insofar as the other two methods was concerned, thetenders were rejected. Therefore, the question of passing another resolution on 24-10-2004 for issuance of confirmation in favour of the highest bidder of the Districtpackage after payment of 25% of the knocked down amount does not arise. Oncethere was a rejection of the individual packages, the revival of District package doesnot arise. The District Level Committee ought to have reauctioned the whole thinginviting fresh tenders. It is also stated by the learned senior counsel that the auctionswere deemed to have been knocked down on 20-10-2004 itself and the question ofpostponing and taking a decision to invite the 4[th] respondent for negotiations doesnot arise. It must be deemed that the auction was knocked down in favour of the 4[th]respondent on 20-10-2004 and he was supposed to pay 25% of the bid amount onor before 23-10-2004. Since he had not paid the amount within that time, theappellant in W.A.No.1910 of 2004 would have been offered to pay 25% of theamount being the next highest bidder. Not accepting such a plea was bad in law.Even if the 4[th] respondent was called to accept the bid by offering highest amount,which would have fetched in the first method of individual reaches, opportunityshould have been given to all the 8 bidders, who participated in the third method ofdistrict as one package and offering it only to the 4[th] respondent is arbitrary andillegal.

Smt. N. Shobha, learned counsel for the appellants in Writ Appeal Nos.1848 and1884 of 2004, stated that the appellants have participated in the first method ofauctioning 22 reaches separately. Of course, only 18 bidders have participated andfor 4 reaches, nobody participated in the auction. Among 18 bidders, only 8 havedeposited 25% of the knocked down amount. The appellants have also depositedthe amounts against their respective reaches. Therefore, the same could have beenconfirmed in their favour, since they have also deposited 25% of the amount asrequired under the Rules. But, such course of action was not adopted and the official

respondents have taken a decision to switch over to the third method of district as aunit and offered it to the 4[th] respondent herein by way of negotiations with him.Firstly, the very switching over to the district as one package method was illegal,since the appellants have offered 25% of the bid amount, may be a few of thebidders have not participated or they have inflated the bid amount and they have notcome forward to pay 25% of the knocked down amount. If that is so, they could havefinalized the bids in favour of the appellants, who had paid 25% of the amountpromptly and insofar as rest of the reaches was concerned, the auction could havebeen cancelled and the authorities could have called for fresh tenders. Instead ofthis, they have switched over to the third method and by way of negotiations with the4[th] respondent, it was finalized in his favour. If really they were interested in fetchingmore revenue to the State, they could have invited one and all, if necessary thebidders of all reaches of all methods for negotiations along with the 4[th] respondentand there could have been a many bidding and whoever offer more amount wouldhave been successful. This method was not followed and there was something likea private negotiations with the 4[th] respondent and since the 4[th] respondent offeredthe amount, which was equivalent to the amount offered by the bidders for all the 22reaches separately put together, the auction was confirmed in his favour. Such acourse of action is not permissible under the Rules.

Whereas, the learned Government Pleader appearing for the official respondentssubmitted that the composite method of inviting tenders as notified is permissibleunder Rule 9-B (2) of the Rules and it was followed for augmenting the revenues ofthe State. For the previous 3 to 4 years, the Government was getting revenue of onlyRs.80.00 lakhs for the entire district i.e. for the 22 individual reaches put together. Bythe present method, Rs.2,80,00,000/- is the income for the State, since the firstmethod of 22 individual reaches failed in view of the fact that for 4 of the reaches,there was no bidding and though there were bidders for the other 18 reaches, someof them have inflated the amounts only to frustrate the tenders and only a few ofthem numbering 8 had paid 25% of the bid amount. Thus, the first method becameunworkable and as such, the district level committee had taken a decision on 24-10-2004 to switch over to the third method of district package and invited the highestbidder - 4[th] respondent herein – and only to ensure for maximum amount as was being quoted for the individual reaches put together i.e. Rs.2.80 crores, the 4[th]respondent was asked to pay that amount and he readily accepted. Therefore, it wasoffered to him on 24-10-2004 and he had paid 25% of the knocked down amountwithin 24 hours thereafter. As such, the procedure followed by the officialrespondents was neither arbitrary nor illegal and there were no negotiations assuch. Only to ensure the maximum amount, the 4[th] respondent was asked to raisethe amount and he readily accepted and none of the provisions of the Rules wereviolated as stated by the learned counsel for appellants.

Sri C.V. Mohan Reddy, learned counsel appearing for the 4[th] respondent,contended that absolutely there is no illegality or irregularity committed by thelearned single Judge in coming to the conclusion that the writ petitions are devoid ofmerits and liable to be dismissed. It is not the case of the appellants that there wasany procedural lacuna in publishing the notification or there was no transparency inconducting the auction. Therefore, it is not available for the appellants to argue thatthe notification was issued contrary to the Rules or the procedure adopted by theofficial respondents is bad in law, particularly having participated in the tenders, theappellants could not have complained saying that the notification and the procedurefollowed were ultra vires of the Rules, especially at this stage. The notification wasissued in consultation with the District Level Committee as per the Rules. Even if thesame is ultra vires, at this point of time, the appellants-writ petitioners cannot raisesuch an issue, since they participated in the auction with full knowledge. Even ifthere are certain irregularities in conducting the auction, the only thing that this Courtcan examine is as to whether there was any prejudice caused to the public interest.Switching over from one method to other method is contemplated in the notificationitself. Therefore, the official respondents have followed the method, which isadvantageous and which was fetching more revenue to the State. In fact, the verynotification itself contemplates that best of the modes can be followed to protect therevenue of the State. Under Rule 9-B(2)(b) of the Rules, the District Level Committeeis the ultimate authority and it had taken decision in the best interest of the State.Absolutely, there is no scope for any negotiations in this case. The 4[th] respondentbeing the highest bidder and to protect the revenue of the State, the officialrespondents asked him to deposit the amount as was being fetched for the 22individual reaches put together. Thus, no prejudice was caused either to the publicinterest or to the appellants. The minor infractions, if any, cannot be taken into

Analysis

consideration for the purpose of issuance of a writ. Only when the first method ofbidding failed, the 4[th] respondent was invited to accept the bid and he accepted thesame readily. Nothing prevented the appellants to offer more in their bids. Now, theircomplaint that they could have offered more than the 4[th] respondent is imaginativeand speculative. Further, while refuting the allegations of the appellant inW.A.No.1910 of 2004 that though the auction was knocked down on 20-10-2004and it was offered to the 4[th] respondent on the very same day, he failed to deposit25% of the bid amount on the next working day i.e., 23-10-2004 (21[st] and 22[nd] beingpublic holidays) and offering the same in favour of the 4[th] respondent on 24-10-2004was bad, learned counsel stated that till 23-10-2004 no decision was taken by theauthorities for switching over to the third method of district as one package. Sincethe first method of 22 individual reaches failed, the authorities switched over to thethird method on 24-10-2004 and the bid was knocked down in favour of the 4[th]respondent and the same was informed to the 4[th] respondent on 24-10-2004 and hedeposited 25% of the knocked down amount on the same day. Therefore, thecontention of the learned counsel for the appellants that having finalized the auctionin the first method, it must be deemed that the other two methods were cancelled, isuntenable. Learned counsel further contended that this is not the purport of the verynotification. The notification contemplates three methods of bidding and clause (4) ofthe Note thereof makes it abundantly clear that the district level committee isempowered to follow any one of the methods, which would fetch more Revenue tothe State. This is known to one and all, who participated in the auction. In this case,admittedly, when the first method failed, the authorities switched over to the thirdmethod, which would fetch more revenue to the State. The appellants had acceptedall the conditions of the notification with eyes wide open and now it does not lie intheir mouth to complain as to the methodology followed by the District LevelCommittee. In support of his contentions, the learned counsel relied upon thedecisions of the Apex Court reported in TATA CELLULAR v. UNION OF INDIA and AIR INDIA LTD. v. COCHIN INTERNATIONAL AIRPORT LTD.

In TATA CELLULAR case (1 supra), it was held as under:

“85. It cannot be denied that the principles of judicial review would apply to theexercise of contractual powers by Government bodies in order to prevent arbitrariness orfavouritism. However, it must be clearly stated that there are inherent limitations in exercise ofthat power of judicial review. Government is the guardian of the finances of the State. It isexpected to protect the financial interest of the State. The right to refuse the lowest or anyexercise of contractual powers by Government bodies in order to prevent arbitrariness orfavouritism. However, it must be clearly stated that there are inherent limitations in exercise ofthat power of judicial review. Government is the guardian of the finances of the State. It isexpected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14of the Constitution have to be kept in view while accepting or refusing a tender. There can beno question of infringement of Article 14 if the Government tries to get the best person or thebest quotation. The right to choose cannot be considered to be an arbitrary power. Of course,if the said power is exercised for any collateral purpose the exercise of that power will bestruck down.

86. Judicial quest in administrative matters has been to find the right balance betweenthe administrative discretion to decide matters whether contractual or political in nature orissues of social policy; thus they are not essentially justiciable and the need to remedy anyunfairness. Such an unfairness is set right by judicial review.

93. The duty of the court is to confine itself to the question of legality. Its concernshould be :

1. Whether a decision-making authority exceeded its powers?

2. Committed an error of law,

3. committed a breach of the rules of natural justice,

4. reached a decision, which no reasonable tribunal would have reached or,

5. abused its powers.”

In AIR INDIA’s case ( 2 supra), it was observed as under:

“7. The law relating to award of a contract by the State, its corporations and bodiesacting as instrumentalities and agencies of the Government has been settled by the decisionof this Court in Ramana Dayaram Shetty v. International Airport Authority of India[ 1],FertilizerCorpn. Kamgar Union (Regd.) v. Union of India[ 2],CCE v. Dunlop India Ltd.[ 3],Tata Cellular v.Union of India[ 4],Ramniklal N. Bhutta v. State of Maharashtra[ 5]and Raunaq International Ltd.v. I.V.R. Construction Ltd.[ 6]The award of a contract, whether it is by a private party or by apublic body or the State, is essentially a commercial transaction. In arriving at a commercialdecision considerations which are paramount are commercial considerations. The State canchoose its own method to arrive at a decision. It can fix its own terms of invitation to tenderand that is not open to judicial scrutiny. It can enter into negotiations before finally deciding toaccept one of the offers made to it. Price need not always be the sole criterion for awarding acontract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permitsuch a relaxation. It may not accept the offer even though it happens to be the highest or thelowest. But the State, its corporations, instrumentalities and agencies are bound to adhere tothe norms, standards and procedures laid down by them and cannot depart from themarbitrarily. Though that decision is not amenable to judicial review, the court can examine thedecision-making process and interfere if it is found vitiated by mala fides, unreasonablenessand arbitrariness. The State, its corporations, instrumentalities and agencies have the publicduty to be fair to all concerned. Even when some defect is found in the decision-makingprocess the court must exercise its discretionary power under Article 226 with great cautionand should exercise it only in furtherance of public interest and not merely on the making outof a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion thatoverwhelming public interest requires interference, the court should intervene.”

We have given our anxious consideration to the various contentions raised by eitherside and perused the entire material on record including the impugned Judgment.

Admittedly, none of the appellants have questioned the notification dated 3-10-2004 or the procedure followed thereafter in knocking down the bids. All theappellants had participated in the process, subject to the conditions laid down in thenotification. In fact, even before conducting the auctions, on 27-9-2004, the DistrictLevel Committee held a meeting with the contractors. The contractors suggestedthat it is better to conduct auctions by clubbing certain reaches as packages. Afterhaving discussions with the contractors, the Committee proposed to conductauctions to the sand bearing reaches situated in West Godavari District in theaforesaid three methods. Thus, the procedure followed by the Committee inconducting the auctions was within the knowledge of each and every appellantherein. The notification contemplates three methods of inviting tenders and it alsogives powers to the Committee to decide to knock it down in favour of any one of themethods, which fetches more revenue to the State. In this case, admittedly, thefollowing bid amounts were fetched under the three methods in the auction that wasconducted on 20-10-2004.

(1) 22 reaches separately Rs.2,80,98,692/-

(2) 22 reaches as six packages Rs.1,87,63,639/-

(3) 22 reaches as single package Rs.2,73,50,000/- Therefore, on 21-10-2004, the District Level Committee met and resolved to ask the18 highest bidders in the auction conducted in the first method i.e. reach-wise, to pay25% of the knocked down amount before 5.00 p.m. of 23-10-2004, since the total bidamount derived in this method was the highest one. This method failed. The highestbidders of 22 individual reaches were asked to pay 25% of the bid amount, ameeting was also convened with 13 bidders and requested them to see that all thebidders pay 25% of the amount. Only 8 highest bidders of individual reaches cameforward for payment of the amount, one Kakarla Ramaiah, highest bidder ofPrakkilanka reach submitted a representation stating that he was not able to pay the

bid amount and requested for cancellation and ten highest bidders failed to pay 25%of the bid amount, which reduced the amount nearly to Rs.1.20 crores; therefore, thematter was placed before the District Level Committee for its decision. The DistrictLevel Committee on 24-10-2004 in view of the failure of the first method, took adecision to issue confirmation in favour of the highest bidder of the District Packageafter payment of 25% of the knocked down amount i.e. 4[th] respondent herein andrejected individual package method. Respondent No.4 paid 25% of the knockeddown amount on the very same day, he also thereafter paid the entire amount, theauction was confirmed in his favour and he had commenced quarrying. It may benoticed that in the first resolution passed on 21-10-2004, the District LevelCommittee though took a decision to ask the 18 highest bidders in the auction of theindividual reaches to pay 25% of the knocked down amount, but the resolution didnot say that the bids received in the other method were rejected. Whereas, in theresolution passed on 24-10-204, it was categorically stated that it was resolved toreject the individual package method, which earlier offered and knocked down. Thisitself would show that as per Clause-4 of the Note appended to the notification, theCommittee is empowered to shift to the best method of the bids taking the interest ofthe revenue of the State into consideration. Therefore, the District Level Committeedid not resolve to reject the other methods on 21-10-2004, whereas in the resolutiondated 24-10-2004 it had categorically rejected the individual package method afterknocking down the bid in respect of the third method. Thus, the contention of thelearned counsel for the appellants that since initially the bid was knocked down infavour of the individual reaches, it must be deemed that it had been rejected insofaras the other two methods are concerned, cannot be accepted. That was not theintendment of the notification. Therefore, the question of issuing fresh notificationand also inviting tenders or inviting all the bidders for negotiations does not arise.When the highest bid of the 4[th] respondent was knocked down, he was asked to paythe maximum amount that fetched under the method of 22 individual reaches and hereadily agreed and paid the amount. This was done only in the public interest, whichfetched maximum revenue to the State.

A faint effort was also made by all the learned counsel appearing for the appellantsthat the very procedure adopted right from the date of notification to the finalization ofthe bids was contrary to the Rules. But, admittedly, no such specific plea was takenin their respective writ petitions. They have not raised such questions of law, may

be, for the reason that they have participated in the auction consciously and wereasserting that they are entitled for the knocking down of the bid in their favour andsought for such a relief. Therefore, such a contention, at this stage cannot beaccepted. All the appellants have subjected themselves to the entire process ofauction. It is not their case that the auction was not properly conducted or that therewas no transparency in conducting the auction. It is also not their case that knockingdown of the bid in favour of the 4[th] respondent, resulted in loss to the revenue of theState. We have been taken through the different provisions of the Rules. There maybe certain irregularities in the very publication of the notification and also theauthority to do so. But, in view of the above facts, that cannot be gone into and in thisbackdrop, the only question that falls for consideration is whether the decision takenby the official respondents suffers from any prejudice to the public interest.

In the entire Rules, there is no provision which speaks that the bid should beknocked down on the very same day i.e. 20-10-2004. On the other hand, omnibuspower is conferred on the District Level Committee to decide the matter as it likesand the same was made clear in the notification itself. There is also no Rule, whichcontemplates that when the method is switched over by the Committee, all thebidders should be informed and they should be called for negotiations etc.

In a case like this, as rightly contended by Sri C.V. Mohan Reddy, learned counselfor the 4[th] respondent, even if there are some infractions here and there, whetherany prejudice was caused to the public interest is alone to be looked into and not asto any procedure, which was followed. None of the appellants had questioned theprocedure followed either at the time of participating in the bids or in the writpetitions before this Court, specifically. It is also not permissible for them to raisesuch questions, since they have subjected themselves and participated inpursuance of the said notification. Even before this Court, it is their contention thatwhen once the 4[th] respondent was called for negotiations, they should also havebeen invited for negotiations. In fact, the official respondents have emphaticallystated in their counter that they have not made any negotiations with the 4[th]respondent exclusively. Except the ipse dixit of the appellants, there is no materialplaced before the Court that the authorities had negotiations with the 4[th] respondent.Therefore, the learned single Judge has rightly held that the whole edifice of theappellants-writ petitioners was based on the challenge to the increase of the bid

Conclusion

amount fetched in the district package amounts to negotiations with the 4[th]respondent, who failed to deposit 25% of the bid amount on the next day. Further, nobids were finalized on 20-10-2004. In fact, the first decision was taken on 21-10-2004 for offering it to the first method i.e. 22 reaches individually. When that failed,further decision was taken only on 24-10-2004. Therefore, the contention that the 4[th]respondent failed to deposit the amount on or before 23-10-2004 and thus it couldhave been offered to the appellant in W.A.No.1910 of 2004, who is the next highestbidder, cannot be accepted. It was knocked down in favour of the 4[th] respondentonly on the failure of the method of 22 individual reaches separately on 24-10-2004and he had deposited the amount on the very same day. Absolutely, there were nonegotiations and it was only with an intention to get highest amount offered in the 22individual reaches, the 4[th] respondent was asked to deposit the said amount forwhich he readily agreed. Therefore, it cannot be said that such a procedure adoptedby the official respondents was either arbitrary or illegal. Respondent No.4 being thehighest bidder, the auction was confirmed in his favour in the district packagemethod and he was not called for any negotiations. It is not the case of theappellants that the decision of shifting the method and offering it to the 4[th]respondent was not a bona fide one, except making an allegation that the 4[th]respondent was called for negotiations, which is not there. Therefore, in the face ofthe bona fide decision of the public authority, the doctrine of expectation getsassimilated in the rule of law, when the same satisfies the test of non-arbitrarinessand withstand the scrutiny of law. This Court cannot sit over in appeal against thedecisions taken on administrative side when it does not suffer from arbitrariness orlack of bona fides. In the absence of any mala fides attributed to the authorities, evenif there are some infractions here and there, awarding of contract to the 4[th]respondent does not suffer from legal infirmities. No prejudice was caused to thepublic interest in awarding the contract in favour of the 4[th] respondent. Since noprejudice was caused to the interest of the State, the judicial quest in administrativematters has been to find right balance between administrative discretion incontractual matters and any unfairness in the said action. There can be no questionof infringement of the equality clause, if the Government tries to get the best personor best quotation. The right to choose cannot be considered to be an arbitrary power,unless such power is exercised for any collateral purpose. The action of the officialrespondents does not suffer from any of these infirmities. Thus, we find no reasons to interfere with the impugned Judgment in dismissing the writ petitions of theappellants. The Writ Appeals fail and are liable to be dismissed.

Accordingly, the Writ Appeals are dismissed. There shall be no order as tocosts.

Before parting with the case, we are compelled to observe that the issuanceof very notification proposing to conduct the auction is not in conformity with theRules. The District Level Committee itself accepted the bids and finalized the same,which is not provided for under the rules. The auction is required to be conducted bythe authorities as specified in the rules and not by strangers, since none of thepetitioners challenged the very notification and it is for that reason, we did notinterfere with the same. It is brought to our notice that the same system is beingfollowed throughout the State, which, in our considered opinion, is not in conformitywith the Rules. Necessary instructions may have to be issued by the concerned tofollow the rules and not to conduct auctions contrary to the Rules.

We must express our reservations for the manner in which the Rules havebeen made. The Rules are vague and indefinite in their nature apart from beingmutually inconsistent. The powers and functions of the District Level Committee arerequired to be carefully delineated in detail. In our considered opinion, immediateattention of the State Government is required so as to undertake the amendment ofthe Rules removing inconsistencies and absurdities. It is not for us to suggest thedetails as to in what manner the Rules are required to be amended and updated andit is for the Rule making authority to consider as to in what manner the amendmentsare required to be made.

Copy of this Judgment be communicated to the Chief Secretary of theGovernment of Andhra Pradesh, Hyderabad for looking into the matter and for takingappropriate steps.

B. SUDERSHAN REDDY, J.

---------------------------------

29[th] December,2004

---------------------------------

C.V. RAMULU, J.

prk

ASSISTANT REGISTRAR

/TRUE COPY/

SECTION OFFICER

To

1 The Secretary, Government of Andhra Pradesh Industries and Commerce Department, Secretariat, Hyderabad.

2 The Chairman, District Level Committee, West Godavari District.

3 The District Panchayat Officer, West Godavari District, at Eluru.

4 Sai Babu Reddy, S/o. Jagadhal Reddy,

R/o. Pekeru, Eragavaram Mandalam,

W.G. District.

5. 2 CCs to Govt.Pleader for Industries and Commerce, High Court Buildings,Hyderabad (OUT)

6. 2 CD copies

7. 2 CCs to G.P for Panchayat Raj & Rural development, High Court Buildings,Hyderabad (OUT)